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November 8, 2013

Top Portfolio Products: New Bond ETFs From ProShares, Franklin Templeton

Other new products and services are rolled out by Global X and Mercer

New products and changes introduced over the last week include an investment-grade bond ETF from ProShares with a built-in interest rate hedge and several other exchange-traded funds, along with Mercer’s Advisor Portal.

Here are details on the latest product developments of interest to advisors:

1) ProShares Launches First Investment-Grade Bond ETF with Hedge

ProShares announced the launch of ProShares Investment Grade-Interest Rate Hedged (IGHG), the first investment grade bond ETF in the U.S. that provides a built-in hedge against rising interest rates, it says.

IGHG targets a duration (a measure of interest rate sensitivity) of zero by shorting Treasury futures. It tracks the Citi Corporate Investment Grade (Treasury Rate-Hedged) Index, which is a U.S. dollar-denominated index that measures the performance of investment grade corporate debt.

The index consists of a long position in investment grade corporate bonds and a duration-matched short position in U.S. Treasury bonds. The investment grade portion of the index offers exposure to the more liquid, cash-pay bonds.

2) Franklin Templeton Launches Short-Duration U.S. Government ETF

Franklin Templeton Investments announced the introduction of Franklin Short Duration U.S. Government ETF (FTSD), which is an actively managed ETF that seeks a high level of current income and preservation of capital by following a short-duration U.S. government portfolio strategy. It tracks the Barclays U.S. Government 1-3 Year Index, but can also take advantage of opportunities outside the index.

FTSD is managed by Roger Bayston and Patrick Klein. Under normal market conditions, it will invest at least 80% of its net assets in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, including government-sponsored entities.

It generally will invest a substantial portion of its assets in mortgage-backed securities including ARMS, but will also invest in direct obligations of the U.S. government (such as Treasury bonds, bills and notes). It may also invest in U.S. inflation-indexed securities issued by the government.

4) Global X Funds Launches Next Emerging & Frontier ETF

Global X Funds announced the launch of its Global X Next Emerging & Frontier ETF (EMFM), which tracks the Solactive Next Emerging & Frontier Index and has exposure to economies such as the Philippines, Nigeria, Chile, Panama, Pakistan and the Czech Republic.

Countries included in the index represent 24% of the world's population, but just 12% of the world's gross domestic product and 8% of the world's equity market cap. The index does not include equities from the BRIC countries (Brazil, Russia, India, and China) and other, more advanced economies like South Korea or Taiwan.

Based on the youth of the populations present in the countries tracked by the index, Global X expects those countries to generate more competitive labor forces that likely will become the world's major supplier of low-cost labor.

The firm also expects these countries to provide low correlations to both developed markets and each other, since they are driven by domestic-focused sectors including agriculture, construction and local banking. The index incorporates a capping mechanism to ensure diversification across sectors and individual countries.

5) Mercer Teams with FE, Lipper to Deliver Mercer Advisor Portal

Mercer has announced that it has teamed up with FE and Lipper to provide the technology and data behind the consultancy’s Mercer Advisor Portal (MAP). FE will provide, through the Mercer-branded MAP tools, Mercer’s research analysis of investment strategies combined with advanced analytical functionality.

Financial intermediaries will be able to select and analyze funds, assess their clients’ investment fund and portfolio risk and conduct analysis of fund sectors. There will also be data feeds of prices, dividends, corporate actions and documents for approximately 300,000 funds from markets across the world.

FE capabilities and data will be used in most markets outside the U.S. Within the U.S., Mercer and FE will be using Lipper as the main source of investment data.

6) Robot Will Ring Closing Bell to Mark Launch of ROBO-STOX ETF

The UR5 robot arm from Universal Robots will ring the NASDAQ closing bell on Nov. 12 to mark the launch of the ROBO-STOX Global Robotics and Automation Index ETF (ROBO). Exchange Traded Concepts, LLC, is the advisor to ROBO, and Index Management Solutions will act as subadvisor.

ROBO seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ROBO-STOX Global Robotics and Automation Index, which benchmarks the value of robotics, automation and related technologies.

ROBO invests primarily in the equity securities of robotics and automation companies, and seeks to take advantage of the robotics trend as it continues to grow through capturing a representative portfolio of the industry.